Earnest money is a deposit a buyer pays to show genuine commitment to a purchase. It demonstrates the buyer is serious and is typically applied toward the price on completion — or, depending on the terms, may be at risk if the buyer pulls out without cause.
Where you’ll see it
You’ll see earnest money paid when an offer is accepted and a sale agreement is signed. The contract should state how much it is, who holds it, and what happens to it if either party fails to proceed.
Why it matters
Earnest money gives the seller confidence and binds the buyer to the deal. The crucial detail is the conditions: whether and when it can be forfeited or refunded. Misunderstanding those terms can mean losing the deposit.
What it is not
Earnest money is not the full down payment, and it is not automatically non-refundable — the contract terms decide. It overlaps with the 10% deposit commonly paid on signing a Dubai sale agreement.
Example
On signing the sale agreement, a buyer pays earnest money held pending completion; it counts toward the price at transfer, subject to the contract’s terms on default.
Connected documents and parties
Sale agreement, deposit receipt; buyer, seller, agent or escrow holder.
Going deeper: related reading: deposit forfeiture.
Related Terms
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